Purists' Reservations

Daoud Hawa, center, talks with Ahmad Ashkar, left, as Daoud Hawa hosts a dinner party to break Ramadan fast with some Muslim friends at his home in Herndon, Va. Daoud Hawa, a real estate agent, used an Islamic loan to buy a townhouse in Fairfax and then a conventional one to buy a single family home in Herndon. Now he's trying to refinance his Herndon house with an Islamic loan. (Jahi Chikwendiu -- The Washington Post)

Daoud Hawa felt a bit guilty after he bought his three-story Colonial in Herndon about three years ago.

That's because Hawa, a Muslim, used a conventional mortgage even though Islam forbids followers from paying or earning interest. He had shopped around for non-interest options and found a few financing programs that catered to Muslims. But none could lend him more than $360,000 and he needed $415,000.

So his practical side chose the conventional loan. He hoped that living not far from his mosque would make up somewhat for the way he bought the house.

Still, his unease festered. Over the years, the amount of money available increased. Now, he is negotiating to refinance his house -- the Islamic way.

"I'm doing it because it gives me peace of mind," said Hawa, 32, who is of Palestinian descent. "It's a burden lifted off my shoulders and I feel better."

For decades, American Muslims who believe that the Koran forbids mortgages have struggled to reconcile their faith with their finances. Like Hawa, some went the conventional route despite misgivings. Others bought homes for cash if they could afford to do so. And many stuck to renting even if it made little financial sense.

But as the number of Muslims has surged in this country, driven by immigration and conversions, so have their home financing options. Today, at least half a dozen companies are chasing after the potentially lucrative U.S. Muslim market, promising non-interest-bearing mortgages that comply with Islamic law, or sharia .

The intertwining of the religious and the economic brings with it plenty of controversy. Islamic jurists all over the world continue to weigh in with opinions on which models they deem acceptable, if any. That's left some American Muslims confused, and even skeptical, about their choices, and others feeling empowered.

"For some, it's become an expression of Muslim identity in a way that's distinctively American," said Bill Maurer, author of the book "Pious Property: Islamic Mortgages in the United States."

"After all, homeownership is the ultimate American dream. People around the world generally don't own their homes."

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Islamic law encourages investment and profitmaking. But it instructs Muslims not to engage in what is called riba , generally described as illegitimate or excessive gain -- a concept also discouraged in early Judeo-Christian lending.